HB356: Centrally Planning the Salt Lake City Economy

This bill passed the House 49-23 and passed the Senate 17-11. Visit our Legislative Index to see the final vote rankings for the 2014 general session.

Libertas Institute opposes this bill.

Last year, the Senate narrowly supported a bill to incentivize the creation of a new hotel and convention center structure in Salt Lake City. Despite heavy lobbying by the Chamber of Commerce and local officials, the bill narrowly failed in the House on the last day of the session.

The bill, only slightly modified, is back. House Bill 356, sponsored by Representative Brad Wilson, seeks to provide up to $75 million in tax incentives—$25 million each from the city, county, and state.

While lowering one’s tax burden is always a good idea, this central planning policy disadvantages surrounding competitors who do not receive similarly favorable treatment from the government. Having to pay more in taxes, they cannot offer similar rates to customers, wages to employees, and benefits to the community.

Proponents argue that a larger facility is needed to attract larger conventions, and that in doing so, more spending will occur in the surrounding area, and thus more tax revenue will be generated for government coffers. Whether this is true or not it entirely beside the point; the question that must first be addressed is whether the government should be incentivizing the creation of such structures at all. To that question we respond with an emphatic no.

Further, we find the state to be inconsistent on this issue. A recent legislative audit found that the University of Utah’s Red Zone stores were unfairly competing with private competitors, and in response the stores are shutting down. The argument that similarly unfair competition will be introduced by this proposed hotel/convention enter is altogether dismissed by its proponents. A report commissioned by the Utah Taxpayers Association substantiates this concern, finding that existing hotels will lose out on $105 million in the first five years to the new facility, effectively creating a transfer of wealth from privately-owned hotels to the taxpayer-subsidized “new kid on the block.”

The bill has received additional support this year in the form of co-sponsorship by House Speaker Becky Lockhart who told The Salt Lake Tribune that she was “honored to lend [her] support to this visionary venture.” Though she voted against the proposal last year, she now supports the project reportedly due to a provision in this year’s bill that provides funding for advertisements that can be distributed in advance to people attending conventions in Salt Lake City, encouraging them to lengthen their stay in Utah and visit other attractions.

As we have often argued, the proper role of government is to protect our rights—not centrally manage the economy and incentivize businesses. While we would love to see a new hotel and convention center, we reject the notion that it cannot exist without tax credits; if such an institution is deemed profitable and beneficial, then private investors will support it. If not, government should not come to its rescue.